An Australian research organization owns patents vital to the WiFi standards.

US consumers will be making a multimillion dollar donation to an Australian government agency in the near future, whether they like it or not. The great majority won't even know about it—the fee will be hidden within the cost of a huge array of tech products. After the resolution of a recent lawsuit, practically every wireless-enabled device sold in the US will now involve a payment to an Australian research organization called the Commonwealth Scientific and Industrial Research Organization, or CSIRO.

In the culmination of a nearly decade-long patent campaign, CSIRO has now scored a $229 million settlement from a group of nine companies that make a variety of wireless devices and chips, including Broadcom, T-Mobile, AT&T, and Lenovo. The settlement was reached last week just before the companies were scheduled to face a jury in Tyler, Texas—a location with a growing reputation for patent lawsuits.

CSIRO (commonly pronounced “si-roh”) adds this lump sum to the $205 million it received in 2009, when a settlement with 14 companies was struck midway through another East Texas trial. Soon after that, CSIRO began boasting to the Australian press that WiFi was a homegrown invention. By suing over its patents, it anticipated an additional "lazy billion" out of tech products sold in the US. Ultimately, this didn't quite happen—but CSIRO is about halfway there.

Haven't heard of CSIRO? It's no mistake. While the organization has been eager to brag to the Australian press about its big-money exploits in US courts, CSIRO has been circumspect about its lawsuits in the US. When it began its litigation campaign in 2005, CSIRO considered filing under the name "Government of Australia" but decided that would be "too provocative," according to a cable about the issue published by WikiLeaks. CSIRO also considered filing a case at the US International Trade Commission—a move that could have resulted in a ban on the importation of wireless devices—but realized that step was "too drastic," according to a US diplomatic official.

CSIRO started out by making a stunning $4-per-device royalty demand. The number may have looked small buried within the cost of a $2,000 laptop but it would have significantly increased the price of a $20 router or a $10 wireless card. The ultimate settlement payments aren't anywhere near that high—especially when you consider around 700 million WiFi-enabled devices were shipped in 2011 alone—but the demand was high enough that CSIRO officials reached out to US diplomats. They wanted to emphasize the $4 gambit was "an opening figure" that CSIRO did not "expect to get in the end."

Now that we're paying the real bill, it's fair to ask: who exactly are we paying? And why?

WiFi according to CSIRO

CSIRO was founded in 1926 as the Australian government’s research lab. During World War II it focused on issues like food preservation. Today, the company works in a wide range of research areas: food security to environmental science, chemistry to energy exploration, even mineral science. CSIRO still receives most of its budget from the government; similar in some ways to the National Institute of Health in the US. The company has 6,400 employees (the majority of whom are scientists) at 55 different sites throughout Australia.

Its path to becoming the "WiFi inventor" started when a CSIRO astrophysicist, John O’Sullivan, was tasked with building a high speed wireless network. He didn't begin building a team for the project until the early 1990s—well after many of the key technologies already existed, and the ultimate relevance and success of O’Sullivan’s project is now one of the most heavily litigated issues in the history of technology. CSIRO's $229 million payday is just the latest example.

The recent settlement means that the nine defendant companies (Acer, Atheros, AT&T, Broadcom, Gateway, Lenovo, T-Mobile, Verizon, and Sony) will avoid yet another courtroom showdown in East Texas. CSIRO officials now claim that 90 percent of the WiFi-enabled device market has licensed its patent.

But what if this case had gone forward? The partial transcript from the 2009 trial still stands as the only extensive public record of CSIRO's outsized claims to have invented WiFi. The decision about who invented WiFi within this recent case would have been up to a small panel of citizens. They would have convened over two weeks in Tyler, Texas to listen to competing teams of the nation's top patent lawyers spar over the origins of WiFi.

In a sense, it's surprising such a debate could happen at all. Why is the history of such an invention in dispute? The premier world engineering institution, the IEEE, created a working group for the evolving 802.11 wireless standard in 1990, a full three years before CSIRO filed for its key wireless patent. The group voted repeatedly on which way to go forward and produced heaps of records, but CSIRO didn't even participate in the 802.11 committee. The group published the first 802.11 standard in 1997 and CSIRO came forward years after the fact.

The company hired US patent lawyers who told a very different story about innovation, ultimately a very lucrative tale in an East Texas courtroom. The narrative goes like this: CSIRO's idea of using "multicarrier modulation" to defeat the problem of indoor interference with radio waves was way ahead of its time. However, the "multicarrier" strategy was met with skepticism by a tech industry going in the wrong direction. They didn't even start to "get it" until a key, almost magical, date: January 23, 1996. That's when the US Patent Office granted CSIRO US Patent Number 5,487,069. "After that things began to change, not rapidly right away, but they did change," said CSIRO's attorney at the time Dan Furniss, a well-respected San Francisco patent lawyer (Furniss died in 2010, surely a blow to CSIRO's new case).

The five CSIRO scientists named on the '069 patent changed the world, in Furniss' eyes. "CSIRO did not invent the concept of wireless LAN, it just invented the best way of doing it, the best way it's used now throughout the world," Furniss told the jury in 2009. CSIRO scientists had tirelessly tested hundreds of techniques until it found a "unique combination" that worked at high speeds.

That combination involved multicarrier modulation (also called OFDM) as well as two techniques called "forward error-correcting" and "interleaving." The combination was CSIRO's intellectual property and deserved protection. "In some ways it [the intellectual property] may be the most important property we have, because it protects our ability to go forward in the future," said Furniss. "It protects innovation."

When the IEEE adopted the 802.11a standard in 1999—and the more widely-used 802.11g standard years later—the group was choosing CSIRO technology. Now CSIRO had come to court to get the payments it deserved.

CSIRO wasn't in the business of actually making things but, in the case of the WiFi patent, it couldn't find a commercial partner to work with, either. CSIRO scientists shopped its ideas around to Apple, Hewlett-Packard, Lucent, and others. No takers. CSIRO lawyers explained away the rejections as evidence of how visionary the Australian group was. "These are large companies," Furniss told the jury in 2009. "They're very innovative. They have a lot of scientists. And yet they didn't come up with this idea. They knew about it, they considered it, but they didn't do it."

The organization formed a short-lived alliance with IBM, but the US tech giant ultimately chose to drop the arrangement. The closest thing CSIRO ever had to a commercial product was a "demonstration chipset" produced by Radiata, an Australian wireless company formed by ex-CSIRO employees. Radiata was acquired by Cisco in 2000 for $295 million but turned out to be a dot-com era boondoggle. Its products weren't successful. Cisco ultimately took a large write-down on the value of the Radiata acquisition.

A few years after the Radiata venture, CSIRO officials knew they had no footing in the actual market of wireless products. Yet, they recognized there was still an area they could pursue to get a second chance to make money off their invention: threatening companies with patent lawsuits in far-off US courts. It was a practice rapidly becoming an industry of its own. In 2003 and 2004, the organization sent letters to 28 different wireless companies asking for money but was rebuffed by all of them. In 2005, CSIRO picked a "test case" against a small Japanese company called Buffalo Technology. Buffalo wasn't like US tech heavyweights, already used to dealing with a barrage of patent litigation. Instead, Buffalo stood out for its impertinence. CSIRO official Nigel Poole said the company had practically "picked itself" as the first victim by accusing CSIRO of being "swindlers." Even if other companies had thought it, Buffalo said it.

The case was filed in the Eastern District of Texas. Advantage: patent-holders. Buffalo asked to change venues, but Judge Leonard Davis (who has overseen all the CSIRO lawsuits) wouldn't allow a move. The Buffalo case didn't even get to a jury. Davis ruled on summary judgment that the company had infringed CSIRO's patents. He even issued an injunction that would have banned the company from the US market. Buffalo appealed but ultimately settled.

The Buffalo case itself probably wasn’t a huge money-maker, but as a “test case” it worked well. Future cases would be heard in the court preferred by CSIRO’s lawyers, by a judge who had already ruled in CSIRO’s favor.

Good on the csiro, about time australia was respected by the international community for our tech innovation, look at what happened with the bushmaster military vehicle and how that idea was "poached" by US military and basically the inventors got screwed, i think they should pay the csiro more, compare this patent row to say facebook or google , apple patents etc, haha, bout time!!!

And btw-they did invent it, otherwise they would have recieved nothing.

Good on the csiro, about time australia was respected by the international community for our tech innovation, look at what happened with the bushmaster military vehicle and how that idea was "poached" by US military and basically the inventors got screwed, i think they should pay the csiro more, compare this patent row to say facebook or google , apple patents etc, haha, bout time!!!

And btw-they did invent it, otherwise they would have recieved nothing.

I doubt the money will be enough to cover the amount that Australia government had invested until now . just hope can cover operating cost

Why on Earth does any judge allow this to be honored? They are another country, we don't have to respect their organization because they don't have a real presence here. Surely if we passed a law taxing Australians for whatever strange reason we devise, and our courts ruled that it was allowed, they would laugh at us trying to collect that tax and they certainly wouldn't pay up.

Good on the csiro, about time australia was respected by the international community for our tech innovation, look at what happened with the bushmaster military vehicle and how that idea was "poached" by US military and basically the inventors got screwed, i think they should pay the csiro more, compare this patent row to say facebook or google , apple patents etc, haha, bout time!!!

And btw-they did invent it, otherwise they would have recieved nothing.

Whatever it is that you're getting from the international community on this, I seriously doubt that it's anything like respect...

The answer is simple, for a few billion Apple could buy a B-52 and load it up with H bombs, and give the judge in texas the option of shutting his pie hole, or be vaporized.

Sorry sorry. What does Apple have to do with this at all? Nothing. Thanks.

I agree with others that have said this is absurd for the US court to allow the Australians to get away with this. Why did they wait 10 years to start this? And how did they come to their settlement amounts (both of them)?

And good on Buffalo calling CSIRO on their bullshit.

Research nothing, they shouldn't have to go to these lengths to get money.

Although this article may be correct, and the Aussie government may be a successful patent troll, the one sided discussion does not fill one with anything other than a sneaking suspicion that the author has had an ox or two gored by Aussies or in Texas. For anyone with even my rudimentary knowledge of patent law, having been an occasional inventor, the date of first filing, not the date of publication is what is important, so when the patent issued is irrelevant. Secondly, ignorance of the patent literature is not an excuse in patent litigation. The mere fact that someone representing one of the defendants had not heard of the patent shows that either his IP department should be looking for a new line of work, or he should actually read those E-mails from said IP department. But I do like the concept that we still own the invention and do not have to pay royalties if we never bothered to read anybody else's' patents to begin with. In the real world, "head in sand" has a corollary of "ass in air".

I think we're getting a little over excited. Most of the world has to play by the patent laws and copyright rules set by the US. Sounds to me like our CSIRO just outplayed you at your own game. Best to be gracious!

Why on Earth does any judge allow this to be honored? They are another country, we don't have to respect their organization because they don't have a real presence here. Surely if we passed a law taxing Australians for whatever strange reason we devise, and our courts ruled that it was allowed, they would laugh at us trying to collect that tax and they certainly wouldn't pay up.

Its this sort of attitude-"we dont have to respect their organisation" mentality that gives your country a bad name internationally. Australia has been screwed by the usa so many times, in so many ways, that this is what may be loosely described as "poetic justice".Thats not how you treat your allies pal.

The CSIRO (pronounced always C S I R O) is a pretty cool agency. They have helped wipe out the rabbit problem here, the fly problem is a lot less of a problem and done a lot of other really interesting things.

Not sure about wifi, and I hate patent trolls (and yes, I'm a huge Apple fanboi).

No offence, but so much of this article sounds like the author has made up their mind beforehand and is writing to fit that world view. The whole thing stinks of confirmation bias.

Not to mention lots of little things that are false, and I can only assume either misunderstood or made up on the spot. (I've never heard CSIRO pronounced “si-roh", it's always pronounced by saying each letter. I no way is this a "donation", that is just antagonistic wording. No one has been "bragging" to the press, just the normal 'political regurgitation'. The inventors aren't treated like heroes at all, in fact the first thing I heard about this was from Ars!)

Why on Earth does any judge allow this to be honored? They are another country, we don't have to respect their organization because they don't have a real presence here. Surely if we passed a law taxing Australians for whatever strange reason we devise, and our courts ruled that it was allowed, they would laugh at us trying to collect that tax and they certainly wouldn't pay up.

Let's see. What's the number one export of the USA? "Intellectual property" - movies, TV shows, that sort of thing.

If the US were to stop honouring patents filed by overseas interests, how long do you think overseas governments would continue to honour US copyrights and patents? Who would end up worst off overall in the long run? There's a short-term vested interest in ignoring inconvenient patents, but a much greater long-term vested interest in honouring them, lest a tit-for-tat "war" erupt.

On another note entirely: rather disappointing article. There's a lot of "he said, she said", and not a great deal going in depth about the patent and why it might - or might not - be genuinely valid. I'm not a radio engineer, so I'm not qualified to judge; having some in depth analysis of the merit of the patent - by somebody who doesn't have a vested interest (meaning either CSIRO, or somebody working for a company that sells WiFi products) - would be both interesting and informative. This ... this just seems like filler that somebody wrote in between "serious" assignments, at least to me.

Full disclosure: I'm Australian, and my inclination is to trust the CSIRO. So it's entirely possible that I'm biased and in need of more evidence than would otherwise be justified. But at this point, I really haven't seen anything that looks at this stuff in depth, and I really would like to.

Although this article may be correct, and the Aussie government may be a successful patent troll, the one sided discussion does not fill one with anything other than a sneaking suspicion that the author has had an ox or two gored by Aussies or in Texas. For anyone with even my rudimentary knowledge of patent law, having been an occasional inventor, the date of first filing, not the date of publication is what is important, so when the patent issued is irrelevant. Secondly, ignorance of the patent literature is not an excuse in patent litigation. The mere fact that someone representing one of the defendants had not heard of the patent shows that either his IP department should be looking for a new line of work, or he should actually read those E-mails from said IP department. But I do like the concept that we still own the invention and do not have to pay royalties if we never bothered to read anybody else's' patents to begin with. In the real world, "head in sand" has a corollary of "ass in air".

Oh for fcsk's sake.

These sorts of debates would work a lot better if the participants wouldn't keep shifting the goalposts. What is the question? Is the question - a MORAL one? Is the patent bogus in the sense that it is immoral, it patents what is widely considered to be obvious and is gaming the system. This is the constant complaint of most of the commenters regarding patents on Ars. OR- a LEGAL one? Is the patent valid according to the laws and precedents of various legal systems? If your interest is in this second point, then you care about the outcomes of court cases --- but you don't then rant that various court cases are "unfair".

What a load of rubbish this article is. Joe Mullin should be reprimanded and perhaps trained in the ways of true journalism if he is to be retained.

When you start an article with "US consumers will be making a multimillion dollar donation to an Australian government agency in the near future, whether they like it or not" you just know the article is going to one-sided US-centric rubbish.

Lately the quality of reporting from Ars Technica has really gone downhill with a number of badly written articles and I really wonder why I bother reading the site any more.

If Mr Mullin can't even get the pronunciation of CSIRO ("CSIRO (commonly pronounced “si-roh”) ") correct what hope do we have for the rest of the article. The name of the organisation is an acronym and is spelt out like the FBI not pronounced as a common word.

No offence, but so much of this article sounds like the author has made up their mind beforehand and is writing to fit that world view. The whole thing stinks of confirmation bias.

Not to mention lots of little things that are false, and I can only assume either misunderstood or made up on the spot. (I've never heard CSIRO pronounced “si-roh", it's always pronounced by saying each letter. I no way is this a "donation", that is just antagonistic wording. No one has been "bragging" to the press, just the normal 'political regurgitation'. The inventors aren't treated like heroes at all, in fact the first thing I heard about this was from Ars!)

Really, confirmation bias?Exactly WHAT in the technical description he gave is wrong? I've been saying the exact same things about the CSIRO patent for years, that it is bullshit, the application of techniques that had been known for thirty year or more when the patent is filed. And your counter to this is that you disagree with his statement about how the organization's name is patented?

Tell us something ORIGINAL in the CSIRO patent that makes it worthy of being more than a bullshit patent.

What a load of rubbish this article is. Joe Mullin should be reprimanded and perhaps trained in the ways of true journalism if he is to be retained.

When you start an article with "US consumers will be making a multimillion dollar donation to an Australian government agency in the near future, whether they like it or not" you just know the article is going to one-sided US-centric rubbish.

Lately the quality of reporting from Ars Technica has really gone downhill with a number of badly written articles and I really wonder why I bother reading the site any more.

If Mr Mullin can't even get the pronunciation of CSIRO ("CSIRO (commonly pronounced “si-roh”) ") correct what hope do we have for the rest of the article. The name of the organisation is an acronym and is spelt out like the FBI not pronounced as a common word.

The answer is simple, for a few billion Apple could buy a B-52 and load it up with H bombs, and give the judge in texas the option of shutting his pie hole, or be vaporized.

Sorry sorry. What does Apple have to do with this at all? Nothing. Thanks.

I agree with others that have said this is absurd for the US court to allow the Australians to get away with this. Why did they wait 10 years to start this? And how did they come to their settlement amounts (both of them)?

And good on Buffalo calling CSIRO on their bullshit.

Research nothing, they shouldn't have to go to these lengths to get money.

I agree, csiro deserves every penny they get, patent laws are there to protect the inventors, the real shame is they had to go through litigation in the first place, im not surprised it took ten years, but obviously the csiro was in the right and deserved the money, shame the article paints it all with such a u.s. centric slant, does not reflect well on the author or the notion of a 'sore looser' does it. I seriously doubt any money would have been given had the patent not had some ground to stand on. And you complain about china pinching technology. Oh the irony.

CSIRO is a legitimate research organisation..their website is CSIRO.AU (no .com, .gov, .org....they are the real deal)They aren't a patent troll company. They are funded from various sources including selling what they invent.This innovation (and that's what it was) is no less legitimate because it is now in every device and therefore, as some seem to think, not unique.A "$229M payday" sounds good, but lets start by splitting that cost over the last 20 years since they started looking at wireless networking. These are not individuals getting rich off the back of others efforts, these are genuine research scientists (albeit comfortably well paid) pouring their efforts into genuine innovative projects.Give CSIRO the money so their innovation can continue... Who knows what they will produce in the next 10 or 20 years?(This has been a non-political announcement from a patriotic Aussie who can personally count 2 CSIRO employees as friends....and they are great guys, doing great stuff)

Although this article may be correct, and the Aussie government may be a successful patent troll, the one sided discussion does not fill one with anything other than a sneaking suspicion that the author has had an ox or two gored by Aussies or in Texas. For anyone with even my rudimentary knowledge of patent law, having been an occasional inventor, the date of first filing, not the date of publication is what is important, so when the patent issued is irrelevant. Secondly, ignorance of the patent literature is not an excuse in patent litigation. The mere fact that someone representing one of the defendants had not heard of the patent shows that either his IP department should be looking for a new line of work, or he should actually read those E-mails from said IP department. But I do like the concept that we still own the invention and do not have to pay royalties if we never bothered to read anybody else's' patents to begin with. In the real world, "head in sand" has a corollary of "ass in air".

Oh for fcsk's sake.

These sorts of debates would work a lot better if the participants wouldn't keep shifting the goalposts. What is the question? Is the question - a MORAL one? Is the patent bogus in the sense that it is immoral, it patents what is widely considered to be obvious and is gaming the system. This is the constant complaint of most of the commenters regarding patents on Ars. OR- a LEGAL one? Is the patent valid according to the laws and precedents of various legal systems? If your interest is in this second point, then you care about the outcomes of court cases --- but you don't then rant that various court cases are "unfair".

I can't speak as to the legitimacy of the patents in question; I'm neither a lawyer nor an electrical engineer.

However, the tone of this article is just bizarre. Painting the CSIRO as a patent troll, backed by the ravenous horde of greedy Australians stealing from the poor honest USA consumers? It would almost be offensive, if not so amusing.

So what can we do about this shitty little court district in Texas? I mean, besides encourage them and throw money at them, because the longer this goes on and the more ridiculous these patent wars get, the more likely some small corporates are going to start lobbying FOR patent reform.

...I say small corporates because there isn't a goddamn thing the people can do to stop it when all we can do is vote for "one person" or "another" every two years, and only for our own districts.

Good on the csiro, about time australia was respected by the international community for our tech innovation, look at what happened with the bushmaster military vehicle and how that idea was "poached" by US military and basically the inventors got screwed, i think they should pay the csiro more, compare this patent row to say facebook or google , apple patents etc, haha, bout time!!!

And btw-they did invent it, otherwise they would have recieved nothing.

Just because they are paying out billions...wait it's Australia not a middle-eastern country... millions of dollars, doesn't mean that it has been proven that they invented it. Just as the article stated. I'm sure DARPA came up with the idea way before those "inventors" stumbled upon it. I know what it is, spies! It was probably pilfered from DARPA and taken to Australia! And Al Gore invented the Internet, your welcome Australia. lol XD

I seriously doubt the legitimacy of one party inventing WiFi, I consider it a collaboration of a bunch of companies, individuals, universities, and countries. As the article stated there were many others working on wireless tech before the 90's, some in the US and others abroad. They were just the first to get the patent which expires in 2013. I find it funny that they didn't try to patent it in China and India but now wish they did. Right as the money train is about to run out of steam.